Margins are tight and money needs to move quick in construction and remodelling––we all know that. But one of the best kept secrets is how to make money in the construction industry. Where some of your competitors cut corners, you might be trying to price projects better, or manage your cash flow more efficiently.

The reality is that being a successful contractor who’s more profitable comes down to running a better contracting business, and working with a better business model. We consulted two industry veterans on the topic to help you out. They have two different approaches:

1. Create a profitable business model
2. Build trust immediately with your prospects

Here’s what they have to say about it and the steps you need to take.

Making more money through a new business model

“Working in the trades and building a business are two completely different things,” Ryaan explains. Ryaan’s been in the remodeling industry for 20 years. He explains that it’s easy to get caught up in being a craftsman, but forget to focus on the business side of things. He understood it immediately after reading Profit First for Contractors by Shawn Van Dyke. The reality is that, it is a business, and you need to treat if that way.

“I used to be a full-time kitchen and bathroom renovation and remodelling business owner for 15 years,” Ryaan explains. “You get bigger jobs and sub-contract for electrical, plumbing… whatever you’re not licensed to do… but there are lot of formalities that come with it.”

Ryaan’s secret was to find a business model that worked for him, could be automated, and most importantly, could be profitable. For him, that was a handyman business.

“It’s a stringent licensing and permit process with renovations in Massachusetts. I need a permit to run a remodelling business, but I don’t need one to run a handyman business. With Best Handyman Boston, we’re doing anything from changing light bulbs to replacing rotted out trim boards outside homes, to painting rooms.”

Changing his business model approach by starting a handyman business in 2018 gave him more flexibility. It shortened his project commitments and targeted specific needs that his clients actually had. “I prefer it to remodelling. It’s been 15 years of remodeling, and that means being involved in peoples’ homes for 8 months to a year. It’s a long drawn out process that isn’t as profitable.”

Ryaan explains that over the course of his business, he has focused intently on building out systems, staff, and an office to help it run efficiently. Moving forward, he will focus on his handyman business instead of his remodelling business, which he hopes to sell in the future.

How do you change your renovation business model so it can be more profitable? Here are Ryaan’s top three tips:

Get your license and permits in order

Licenses and permits add complexity to projects, Ryaan explains. However, by having a permit and a license, you add a level of trust to your business.

“Permit laws differ in each state. In New Jersey a general contractor can go down to a local town or city and just buy license without being tested, without filling out any forms. In Massachusetts it’s more stringent. Our competition right now is a bunch of guys who are saying they’re handyman or contractors, but they’re not licensed.”

Even if your city or state doesn’t require a permit or license, you still stand out from your competitors if you have one.

“When you go on our website, we’re fully licensed and insured, very few people are.” That makes a huge difference in his clients’ eyes and adds a level of credibility and trust to his business from the start.

Pay attention to what your customers ask for and what they need

Think critically before assuming what kinds of services your clients are looking for. Do your prospects really want more renovations? Or do they just want small jobs? In order to be a successful contractor you need to give them what they want!

Ryaan experienced this transformative realization a few years ago. “Three years ago there were hundreds of new condos being built in Boston. That meant that there would be a huge need for people to service those condos. We were heavy into remodelling, yet, every site visit it was the same thing: people were asking for smaller jobs or we would be there to look at a kitchen or bathroom.”

“They’d say, ‘while you’re here can you please look at this tiny thing? Nobody will call us back, or even give us a price for this because it’s too small of a job’.”

At that moment, Ryaan realized that there was a bigger market for smaller jobs than there was for big remodels. He began working on a new business model to service those clients, and Best Handyman Boston was born.

Don’t be an antiquated contractor

One of the biggest advantages to building a more profitable business for Ryaan has been going full throttle on his tech game.

“It’s so antiquated in so many ways. You still have guys crossing out their landline card on their business card and writing out their cell phone number and giving it to their clients. That’s 80% of the competition right now.”

Win more sales by building trust right out of the gate

Stanley “Dirt Monkey” Genadek, has over 30 years experience in the landscaping and excavating industry. He’s part of the Dirt Monkey University team, which is dedicated to helping business owners in contracting, contracting, landscaping, and beyond succeed with their efficiency, profits, and customer service.

Stanley strongly believes that taking a consultative sales process is the best way to make more money in the industry. The more trust you build with your clients, the more you can improve your margins.

Consumer psychology dictates that the fear of losing something you have is stronger than the desire of gaining something you want. In other words, your clients’ fear of losing money is stronger than their desire to have a beautiful home. In order to overcome that fear, you have to build trust.

How do you do it? Ask questions to genuinely understand their goals, motivations, and spending concerns. Stanley says that, “at that point, closing sales is no longer about price, it’s about trust.”

Take the time to understand what really matters to your client. Let’s say you’re discussing a basement renovation. Do they want a space to entertain guests or to rent to tenants? A complete bathroom makeover? Do they have foundation or moisture issues?

Find out what is most important to your prospect and where the real value is for them. This way you can establish trust, your professional authority, and set clear expectations for the project and your services.

How to take a consultative approach to make more sales

The well-established power of the consultative sales process can be a game changer for tradespeople competing in a market where, all too often, professional sales savvy is lacking.

“Rapport is the core—the more you can interact with a customer, the more trust you establish,” says Stanley. “The ability to do so will put you light years ahead of a contractor who simply shows up, writes a number down on a piece of paper, and walks away.”

There are nine steps to the trust-building process that will help you close more sales, faster:

1. Target intelligently. Smart salespeople concentrate on prospects with a high probability of closing who offer a good return on investment. That means, don’t work with just anybody, work with clients who are serious about their renovation.

2. Show up on time. “If you say you’re going to be there at 10 a.m. on Monday morning for a 30-minute appointment to go over the options, do it, without fail.”

3. Deliver proposals promptly. “Anyone can write down a quote. Provide customers with a detailed quote, delivered when you say it will be delivered.”

FREE TOOL: Try our free excavation estimate template

4. Follow-up. “During the initial meeting, let the customer know that you will follow-up with them once they’ve had a chance to review the proposal, then schedule a call or visit to answer any questions they have.”

5. Add value from the first contact. Offer your prospect something they desire from the very first contact. This can be anything from immediately getting back to them, to connect them to your best references right out of the gate. Share your expertise and credibility and you’ll build trust.

6. Explore the possibilities. Rather than assume you know what your prospect wants, take the time to explore different options until you find one they can get excited about. This is the beauty of the consultative process. Doing this the right lays the groundwork for a sale because you know exactly what your client wants.

7. Collaborate. Invite your customer to participate in creating the ideal solution. When your clients feel like they are a part of a project, rather than removed from it, they’ll be more empathetic and happy with the outcomes you create. Plus, this makes the perception of risk go way down, making it easier to move beyond trust barriers and commit to action.

8. Provide confirmation. Confirm every decision as you go. By the time you get to the end of the sales process you’ll find that most objections have already been overcome because the customer’s buying criteria are already met.

9. Stay in touch. Once the sale is done stay in touch with the customer. Talk to them about delivery dates, and invite them to track the progress of their project in client hub. In addition to making the customer feel good about their purchase, you’ll deepen your trust relationship with them and set yourself up for repeat business and valuable referrals.

“Building that simple trust that—yes—you are someone who can be relied upon, takes price out of the equation,” says Stanley. “It all happens so much more organically because you’ll connect with the customer on every level until there is no objection left to overcome.”